This week, designer Aurora James of fashion brand Brother Vellies created the "15 percent pledge," asking major corporations to buy more products from black-owned businesses. She said, "We represent 15% of the population and we need to represent 15% of your shelf space." The pledge

This week, designer Aurora James of fashion brand Brother Vellies created the "15 percent pledge," asking major corporations to buy more products from black-owned businesses. She said, "We represent 15% of the population and we need to represent 15% of your shelf space." The pledge seeks to address the challenges of access to capital many black business owners face in building their brands.

With that challenge in mind, we want to shine a brighter light on the incredible fashion talent within the community. Today here's a list of black-owned apparel and accessories companies, based here in the US and abroad, to know about.

Darlene and Izzy Okpo, whose label is named after their father, express their "unique aesthetic that results from the juxtaposition of the immigrant's sense of style against American cultural sensibilities." The result is a mixture of wearable styles with elevated materials and finishings.

After studying at Parsons, Carly Cushnie set up her own luxury label, called Cushnie et Ochs. After ten years of business, Cushnie is now the majority owner of her ready-to-wear and bridal brand. And you're about to see a lot more of this star, as her capsule collection with Target releases this week!

Los Angeles based designer James Flemuns is known for his androgynous, but accessible pieces like his most recent "cloud" print. In a recent interview with retailer SSense, he talks about how he sees the future of fashion.

Knitwear designer Victor Glemaud was a 2017 CFDA/Vogue Fashion Fund finalist and his signature knits will make a statement. (You might've also caught a curation of his products on Amazon's Loose Thread/CFDA Iniative).

Haven't heard of the "Bushwick Birkin?" (Do a seartch for it online, and you'll find it's a tote bag that is known for being equal parts chic and affordable.) The label is the brainchild of designer Telfar Clemens, whose unisex label has been around for more than 15 years. The brands ethos is, "It's not for you — it's for everyone."

Youssouf and Mamadou Fofana, brothers and co-founders of Parisian brand Maison Château Rouge, set out to rebrand the image of Paris’ most famous African neighbourhood, Château Rouge. In it, they captured the vibrancy and juxtaposition of the special community.

Diane von Furstenberg, where Rogers worked full-time before starting his own label, had this to say about the emerging designer, "He has an extraordinary sense of color and he is completely untouched and unspoiled." Color you will find in his wares, which you can find at stockists including Net-a-Porter.

Khadjia Aisha Ba, another designer in our list from Senegal, mixes unexpected things, like giant safety pins as handbag handles, or a boubou (a traditional women's garment in Senegal) made from camouflage material (and as seen on Naomi Campbell). Her wares can be found in the US at Brooklyn based Marche Rue Dix.

There's plenty we didn't get to in this list. Won't you please let us know some of your favorites and share the love?

]]>When it comes to figuring out what the future might look like, nothing beats getting some of the smartest people you know together in one room. And while we're not able to physically do that these days, we've got the next best thing - some of retail's leading experts in]]>https://stylesage.co/blog/expert-covid-19/e2116be4-725e-425c-a426-fbe604ecfa31Tue, 26 May 2020 20:07:49 GMT

When it comes to figuring out what the future might look like, nothing beats getting some of the smartest people you know together in one room. And while we're not able to physically do that these days, we've got the next best thing - some of retail's leading experts in areas from supply chain to creative process. They're here to answer the question, "What's the biggest change that happens to retail and the consumer post-pandemic?"

Expert tip: Want to learn more about these experts and their work? Click the company name for more information!

“Expect coronavirus to have an impact on retail in one major way — consumers and, more importantly, all retailers’ mindsets - will shift to be digital first, which is actually quite a big thing to say. Many retailers were not at this place mentally before the outbreak, But, now, living in a world where one doesn’t know if and/or when a vaccine or a viable treatment option will exist means that retailers need to start asking themselves one question, “What if a store is never a store again?” and work backwards.

Taking this mindset means investing in the digital face of one’s brands, in the flexibility of one’s supply chain, the fluidity of one’s labor modeling and staffing, and making one’s overall retail experience as touch-free and hassle-free as possible.”

Retailers need to start asking themselves one question, “What if a store is never a store again?” and work backwards.

"Better synergy between the physical and online world is long overdue. BOPIS (Buy Online, Pick Up In Store) or some version of that will explode. There will be a rethinking of unused space - not just store space but what about parking lots? How can they be used as “wait zones” for order pickups? And don’t forget about the annoying parts of digital delivery - there’s 30% of American households who can’t accept a delivery package at home. Delivery lockers will likely become much more prevalent. These are the “analog” parts of digital that deserve closer attention.

I’ve often said that too many decisions in retail are being made far away from the front door. Specifically, management makes decisions on how, when, and where the customer is served, even though they spend little time interacting with them. You see this manifesting itself during this crisis.

"It’s been said before, but it bears repeating - this crisis will accelerate all the changes in this industry that needed to happen. Think about how Toyota, post WW2, and how they innovated to arrive at “just-in-time” manufacturing. It was a process that meant to minimize waste – of time, money, and components - that couldn’t be afforded. What's more, it meant they were able to meet customer demand exactly.

If you look today to where the fashion industry is, we have super long lead times, and we’re trying to predict six months to a year in advance what people are going to want. Post-COVID, brands will likely not have the working capital to tie up in inventory that far in advance, nor will they want to take on the full responsibility of that aging product.

So how do we change this? Agility and quick decision making will be key. You’ll see brands and retailers making smaller orders. And to do this successfully, they’ll need to change their relationship with their vendors so that both risk and reward are shared.

Agility and quick decision making will be key.

While everyone’s talked about speed to market and inventory reductions in the past, looking ahead, it’s not going to be a “nice to have,” it’s going to be the only way forward."

“The COVID-19 crisis has made one thing very clear: Data is not only important in merchandising, it’s fundamental. Once the crisis begins to wane, there will be a surge in investments that allow brands and retailers to transform their merchandising processes through automated, data-based decisions. Ultimately, digitally transforming fashion retail in this way is a means to the ultimate end - a better customer experience.

COVID-19 will leave behind a starkly different fashion industry, especially in terms of consumer behavior and demand. Among other changes, customers will be more purpose-driven in their consumption, affecting assortment and price points. They’ll also need more flexible customer journeys, accelerating the need for true omnichannel capabilities.

Customers will be more purpose-driven in their consumption, affecting assortment and price points.

To adapt to these changes, retailers will need a complete, bottom-up vision of inventory and demand, which will only be possible through data. That’s why they’ll move fast to shift from the top-down decisions and simplifications that used to work in the past, to agile, data-driven merchandising.”

"It’s a bit difficult to predict what will happen post-pandemic since the news changes every day. Furthermore, consumers aren’t a monolith—people have different lives, priorities, and spending power. Shoppers will be more selective about their purchases, so retailers will need to create more tailored experiences with the help of technology, from consumer engagement to delivery.

Strategies could include everything from encouraging customers to vote early via social on new designs to customized packaging and delivery (less packaging/ consolidation of shipments). Savvy retailers will put their efforts towards digital—check out the newly AI-powered launch of The Yes, the app completely tailoring fashion feeds to the individual consumer via a Yes/No questionnaire.

Engagement-wise, brands need to be easily discoverable online, have a robust social media strategy, and digital concierge assistants that seamlessly assist both novice and seasoned online shoppers. There will also need to be a focus on supply-chain and delivery as on-demand, and door-to-door models will be applied to more categories of business, including fashion, wellness, and home goods."

"Covid-19 has emerged as a defining event for today’s Gen Zs and Millennials. Despite well-publicized pictures of young people partying on spring break back in March, the overwhelming majority of 18- to 34-year-olds say that they are “closely following” the news about COVID-19, roughly the same as all other generational cohorts. Building upon the findings of the Cassandra Report®, we are looking at youth through the lens of Covid-19 to provide insights on which cultural trends are emerging, which values are being amplified and what behavioral changes are likely to be sustained post-pandemic.

One of the things we are watching is mental health. Much has been made already about Gen Z being the “mental health generation,” but many young people are finding their mental and emotional wellbeing under an even more intense assault during the pandemic. In addition to exacerbating feelings of loneliness, stress, anxiety, and uncertainty, Covid-19 is also bringing on a new, and different, feelings of loss. Many young people are now seeing major milestone events such as their prom, graduation, or a wedding postponed indefinitely, if not outright cancelled completely.

Much has been made already about Gen Z being the “mental health generation,” but many young people are finding their mental and emotional wellbeing under an even more intense assault during the pandemic.

Such events mark important rites of passage for these young people: for Zs, their proms or graduation ceremonies were supposed to be the payoff for their hard work as well as a signifier of closure of adolescence and primary education. Many Millennials are cancelling markers of later-stage young adulthood such as weddings & travel. Nostalgia and references to this time in their lives will be completely different for today’s Gen Zs and Millennials than for other generations. And this means that future milestones will likely take on a different tone and how they adapt and celebrate future moments may evolve."

“Personally, I don’t believe there will be any major shifts due to this health crisis – rather the moderate acceleration of ongoing efforts to digitize supply chains. For us as a fashion designer and a retailer with a large brick-and-mortar business that means an accelerating importance of online sales channels and an increased focus on achieving a much more digitally-driven product development process.”

]]>While apparel shopping has taken a major hit over the past few months of stores being shut and consumers being locked down, beauty has told its own story. In an interview for Glossy, NPD Group vice president and beauty industry advisor Larissa Jensen said, “Beauty has been trending above the]]>https://stylesage.co/blog/beauty-covid-19/58b6de91-3b27-4ec3-b71e-b66be1a2731eTue, 19 May 2020 22:37:57 GMT

While apparel shopping has taken a major hit over the past few months of stores being shut and consumers being locked down, beauty has told its own story. In an interview for Glossy, NPD Group vice president and beauty industry advisor Larissa Jensen said, “Beauty has been trending above the performance of apparel, footwear and accessories.” NPD tracks brick and mortar retailers and "found that beauty sales declined by 14% year-over-year in the first quarter of 2020. The overall decline began in March as a result of store shutdowns, as sales had grown by 3% for January and February."

While the closing of brick-and-mortar stores undoubtedly causes pain to beauty brands, what does the online landscape look like? And did beauty brands and retailers respond as their apparel peers did with heavy discounting and promotions? Let's take a look.

Discounting Trends

Typically beauty retailers and brands avoid outright discounting to move product. There's been a seemingly insatiable consumer demand for new products and real focus on product innovation that has helped many brands avoid the pitfalls of discounting. Instead, many beauty brands market products through sampling, limited edition product launches, and heavy social and digital engagement strategies.
So, the billion dollar question is, could brands hold firm to this discount-free strategy during COVID-19? Let's take a look.
This chart shows you how during the first two months of the year, discount likelihood (blue) and average amounts (red) were low, but discount penetration started climbing upwards in mid- to late March. What we saw when we dug into this further was that department stores, not beauty specialty retailers, were the main discounters when it came to beauty products.

Next we examined which product categories were most likely to be marked down, and saw some interesting themes.
To start, while it's not a large category, shaving saw the highest proportion of products on sale, while haircare and makeup were least likely to be discounted. Discounts on shaving products were likely driven by brands and retailers offsetting reduced demand for these product. (As far as the consumer is concerned, it sounds like hair on the head > hair on the face.)

Selling + Demand Trends

While of course discounting can help to drive consumer demand, it helps to understand what consumers were looking for - as well as what they weren't - during this time.
Are you one of the many people who has had to DIY themselves into their adopted hair color? Trends show that there's been a rise in searches for at home color - and not just any - the "easiest" kind. Other things that saw increases were night creams and cleansing oils, indicating that consumers were looking for nourishment and self-care in their beauty products.

What wasn't trending so much were things like former bestseller "Kylie's Lip Kit." Lip color takes lower priority when staying home, of course, being covered up by the face mask. Other notable search declines included eyeshadow kits and makeup brushes.

This search data segues perfectly to the last data points today, data on what's actually selling.
In big part, what's selling out often corresponds to categories that are more likely to be on discount, like shaving, as well as where there's heightened consumer demand, like bath and body self-care products.

Curious to see what else is going on in with beauty retailers? Check out our COVID-19 dashboard for updated global data on discounting, trending categories, and new products.

]]>Doesn't it feel like the world has changed more in the last two months than it had in the past ten years? A recent viral video that tries to explain the current pandemic to one's previous self has gone viral for a reason. Our daily routines, how we can (and]]>https://stylesage.co/blog/covid-consumer-behavior/25711c0b-ff6e-4db7-9a63-6533b9a4ee22Wed, 13 May 2020 01:44:49 GMT

Doesn't it feel like the world has changed more in the last two months than it had in the past ten years? A recent viral video that tries to explain the current pandemic to one's previous self has gone viral for a reason. Our daily routines, how we can (and can't) interact, what we're prioritizing, and most other elements of daily life look worlds different today. With so much change having taken place over a short span of time, it seems evident that we'll come out of this very different creatures. In broad strokes, let's consider how consumer mindsets have already and will continue to shift post-pandemic.

Count on the Irrational

In a Bloomberg Opinion piece last week, retail futurist Doug Stephens talked about how spending helps us as humans tolerate and distract ourselves from our mortality. While a heavy thought, he's right - spending helps us both feel like we have some control over our circumstances and it also boosts our personal self-esteem. (You don't have to tell us twice as to why, in times like these, we're gravitating towards purchases like exercise bikes or anti-aging creams.)

But even as this framework reflects our current behavior, in the world of the consumer, many decisions are simply not rational. A sunny outlook on things can shift to the dark and gloomy just by reading the wrong article or tweet. Compounding that issue today is increased screen time conveying ever-multiplying sources of information, and you can see that many consumers, for the foreseeable future, are going to be experiencing shifting emotions and purchase behaviors. (And let's be clear, much of this is also dictated by financial means - also in flux for many.)

As a brand, you can best be prepared for these "mood swings" through listening and engagement. Gather feedback often, be attuned to small shifts in purchase behavior, and engage with the customer across different channels to capture what they're really thinking.

Health Takes on New Dimensions

While "wellness" was already a booming global movement and market, our collective awareness of health and what that means in our daily lives has taken on new dimensions in this crisis. Through it we've come to understand our actions not only impact ourselves, but they also impact the health and wellness of others.

So you're not a brand who sits in the intersection of health and wellness - the good news is that there are still plenty of opportunities to engage authentically and in ways that you may not immediately connect to the health and wellness conversation. To start, think about these ideas around the different touchpoints related to health:

How can you promote positive mental health with uplifting and inclusive messages and content for your customer?

Are you promoting good habits like movement and self-care?

Do your stores feel clean and safe for shoppers?

How are you protecting the health and wellness of workers across your supply chain?

These are just a few of the ways in which health will be at the forefront of consumer psyche for years to come, and now's the time to re-align your business towards these new (and renewed) priorities.

Making the Tradeoff between Local and Large

There's been an ongoing conversation around whether the small "mom and pop" brands will survive the pandemic, with larger brands having more resources to carry them through the longer-term uncertainty, especially when it comes to digital infrastructure, last-mile delivery options, and access to vast supply chains. While we've never been more reliant on delivery services to provide our "essential" goods like groceries, even the large players have faced problems meeting rising demand. So where the major retailers have been unable to meet said demand, consumers have increasingly turned to local stores.

So how will a consumer choose between the local versus the big-box stores? While the current choice has been driven by necessity, it will also be driven by category of purchase. When it comes to things like groceries, we'll often opt for the most convenient option (delivery, auto-refill, etc.) On the other hand, for things one "keeps" like apparel and decor, we believe more and more consumers will choose local. The locally-made brand tells buyers who's making it, who's profiting from the sale - a sale which tends to keep the money in the local community.

No matter where you might sit on the scale of "bigness," stay attuned of how shoppers are making their channel choices.

More Engaged, More Vocal

During quarantine, brands have been getting creative on how to strengthen connections with shoppers, beyond the transaction. Take, for example, Bottega Veneta's "Residency," where they curate playlists, classes, movies, and other content across a diverse number of global channels including Instagram, Youtube, Weibo, WeChat, Line, Kakao, and Spotify.

With more brands taking this opportunity to engage on a personal level with the consumer, it's likely the consumer will want more of the same going forward. They will want to be part of the product development process, give feedback that is actually heard, and receive more personal service.

We’ve probably all, at some point in our lives said something along the lines of, “I wouldn’t have tried it if [this person] hadn’t made me.” Something that was undesirable, unusual, or unnatural to us, with the gentle nudge

We’ve probably all, at some point in our lives said something along the lines of, “I wouldn’t have tried it if [this person] hadn’t made me.” Something that was undesirable, unusual, or unnatural to us, with the gentle nudge of someone else, becomes something we actually like. I like this analogy for what the retail, and fashion industry specifically, is currently navigating. Let me be clear that I am not making light of the loss that has and is resulting from a global pandemic, but we will face the future. And it’s a future that requires setting aside all preconceived notions of what works and what doesn’t work, and one where hope, humility, and a dash of pragmatism will take us far.

So, what can we expect in fashion retail in the months and years to come?

Working with less, but doing more

Right now, many fashion retailers are working with reduced staffing models to get the business through the short-term, so that there still is a business to manage in the long-term. One of the natural outcomes of this is that with fewer people at the table and urgent, business critical decisions at stake, action is being taken more quickly than it was pre-crisis. Forrester’s principal analyst Sucharita Kodali concurs, “The single biggest change has been how rapidly retailers are moving, how rapidly they are realizing they can move and how much a lot of unnecessary bureaucracy got in the way of decisions.” Not only are things getting done, but major shifts in operations are taking place during this crisis, and organizations need to be thinking about how to harness that agility forward, post-crisis.

Is this a digital issue? Certainly; making sure that broken, stopgap, and archaic systems aren’t slowing down forward momentum is crucial. But I’d argue it’s even more a people issue. Specifically, how can you create an environment where bold ideas aren’t reduced to fragments as they move up the chain of command? Fashion and retail organizations, as they look ahead, ought to be focusing on empowerment, ownership, and accountability in their people and projects. The status quo? Sorry, but it’s got to go.

A supply chain grounded in reality

Turns out that it’s pretty hard to predict what people are going to want to wear in one year’s time. In an industry where a reported 30 percent of merchandise made is never sold, it’s a truth we can no longer afford to ignore as unsold inventory piles up at unprecedented levels. Where fashion retailers have historically planned months, even more than a year, in advance, about what to produce, with lengthy coordination between design, product development, and merchant teams, with production in far-flung places around the globe, all so that it can end up in stores months before it makes any sense to wear, is now a model that is showing its many shortcomings.

What fashion needs is a “see now, buy now” model, where merchandise is in the store at the moment it’s ready to be “consumed,” and where supply equals demand. This is not only going to require the agility we talked about above, but it’s also going to entail a rewiring of the supply chain. Design will have to consider whether merchandise has cross-seasonal appeal, more product development will be digitized, and certain kinds of manufacturing will need to be near-shored for maximum responsiveness.

And let’s not forget, all of this will be taking place in the context of a changing consumer, one who prioritizes both the value of a product and personal values.

Is the road ahead going to be a tough one for retailers? It is, but let’s not forget the good it can, and will, bring. “The only way to make sense out of change is to plunge into it, move with it, and join the dance.”

]]>First, we want to announce that our interactive COVID-19 dashboard is now live! It enables you to do your own analysis on the market, bringing to life the research we've been doing over previous weeks. Here, you can toggle between different countries, product categories, and timeframes, to see just what]]>https://stylesage.co/blog/strategies-covid-19/15e70f37-6152-47a2-998e-ab611d7ab2f6Wed, 06 May 2020 00:54:36 GMT

First, we want to announce that our interactive COVID-19 dashboard is now live! It enables you to do your own analysis on the market, bringing to life the research we've been doing over previous weeks. Here, you can toggle between different countries, product categories, and timeframes, to see just what impact the pandemic has had on the retail market. So give it a spin - and let us know what you think!

That gives us the perfect segue to what we'd like to talk about this week. As we've been reporting each week on what's happening in the apparel market, we've seen a few key themes. The most obvious is that discounting is way up from the previous year, even in categories where it's rare, including many digitally native and luxury brands. The obvious challenge many retailers face is balancing the short-term liquidity and inventory problems this crisis poses with the long-term needs of the business. And with discounting and promotions being a key lever for the short-term, levers that can also harm the business in the long-term, it's worth exploring a few key tactics, in promotions and marketing, to best navigate these extenuating circumstances (and beyond)!

Pick a Promotional Strategy outside the Norm

Since a whole lot is on sale now that wouldn't normally be, it's a good time to think about how you can avoid a promotional strategy that treats Bottega like it's a bargain bin find. Specifically, we've tracked a few creative ways that brands have been discounting but avoiding the cheapening of their brands.
First up, is the archive or sample sale. It's not the perfect fit for every brand, but the words "archive" and "sample" have the ability to unlock an unprecedented sense of scarcity. A few brands that have utilized this strategy include contemporary brands like Ganni, Rotate, and Staud. For this to work it has to be limited time only and the merch needs to still have curb appeal.
Another tactic is to use category-specific promotions. For example, Alex Mill took a discount on excess stock they had on jackets. In a similar vein, handbag brand Mansur Gavriel has been discounting only specific colors of its iconic handbags. There's a certain amount of precision in these types of promotions that is both novel and effective.

Both of these retailers have also employed promotional tactics that have a clear start and end point. There's the quote you've probably heard a million times by now, but it's never been more important. "Your first discount is your most important one." By that we mean make that first discount the one that balances moving product and margin preservation. Additional discounts and promotional time extensions end up delivering diminishing returns.

What Needs to Change on the Page?

Chances are we've all done some mindless scrolling and shopping over the past weeks and months. And while many of us opted to window shop over buying, what and why people are buying is a topic of much speculation amongst industry insiders. Some are buying essentials, others are buying for escapism, and other are buying because it's a darned good deal.

But with everything else that's changed around us, we'd argue the on-page experience needs paying attention to, more than ever.
First up, think about how the language of your product descriptions can be adapted and made sensitive to shoppers' needs in a time like now. What are creative ways to merchandise products together that cater to a shopper whose priorities and needs have shifted. For example, Nike has created a grouping of products for "Home Workout Essentials," and they emphasize with language in the product description that emphasizes comfort ("soft") and versatility ("designed for all-day wear, not just for training"). Our advice is to back and read some of your product descriptions - do they make sense and resonate now? Can you make them more relevant to the moment, while still remaining true to your brand?
Next, think about how important ascertaining fit is at a time like now, when the shopper wants to avoid unnecessary trips to the post office or a store to return something unwanted. It's why clear fit information via the product descriptions, photography, and video play a critical role in converting hesitant shoppers at this moment.

Taking that idea one step further, Zara recently tested out having its models stage their own photo shoots at home. An iniative that's one part practicality, and another part PR, the result was an imperfect but realistic look at the products, marketing that really makes sense in the present moment.

We hope these ideas get you thinking about how to be relevant and effective in these times (and beyond). In the meantime, don't forget to check out our COVID-19 dashboard!

]]>Highlights:
-There are signs that discounting is stabilizing as April goes on, even while we see discounts higher than the same time last year.
-Unsurprisingly, discounting is driving higher rates of sold-out products.
-Yet for the luxury sector, since early April, discounting has had a seemingly negligible impact on sold]]>https://stylesage.co/blog/covid-19-april-29/3e7ca4be-0104-4460-96f5-56e9a82e061cWed, 29 Apr 2020 01:15:13 GMT

Highlights:
-There are signs that discounting is stabilizing as April goes on, even while we see discounts higher than the same time last year.
-Unsurprisingly, discounting is driving higher rates of sold-out products.
-Yet for the luxury sector, since early April, discounting has had a seemingly negligible impact on sold out product rates.

There are signs of life emerging as we near May, and while we're a ways off from anything approximating normalcy, there are signs that e-commerce is settling into this new way of business. Let's check out what's happened since last week.

Luxury

For better or worse, discounting levels remain high and unchanged in the luxury sector, especially as we look at the US, UK, and Germany markets. Average discounts have also remained even to their levels over the past week. (Data not shown.)
Examining where luxury retail stands relative to last year is also important, and here we see (in the US market), that how much is on sale is more than twice what it was during the same time last year.
Lastly, we also took a look at the impact discounting, as an infrequently utilized tool in luxury, had on whether products sold out. While it helped moved product through the end of February and into March, what we saw was that over the month of April, as lockdowns and uncertainty continued, discounts seemed to have a diminishing effect..

The question many luxury brands and retailers are asking themselves currently is, "What will it take for someone to feel comfortable enough to plunk down a couple thousand dollars on a new handbag?" It's a thought to keep in mind in your merchandising and marketing strategies over the weeks and months ahead.

Active + Sportswear

As we turn our lens to activewear, there's been a mixed bag of results, most recently with Adidas citing a 90%+ decline in Q1 profits, due to coronavirus store closures. Do we see steadiness or instability over the past week? Let's check it out!
Positively, we see stable trends from the previous week in terms of both discount penetration and average discounts (latter not shown).
Nonetheless, there still are differences between where we are currently and last April, in terms of how much is on sale. This year, active footwear (sneakers) is more likely to be discounted than active apparel, a trend that also played out last April.
For activewear, we also examined what, if any, impact on sell-through exists for discounted versus non-discounted products. Unsurprisingly, for sale products the average sold out rate has averaged around 10% since March, with a jump in early April. For non-discounted products, sold-out product rates remained low, but they have been climbing slightly since early April.

Specialty Retail

In specialty retail, there's been a trend of high discounts for some time, and as some stores start to come back online in the coming weeks we'll be tracking whether these discounts decline.
First up, we see that there's been a 1-2 percentage point decline in how much is on sale and how high those discounts are, both positive signs.
We also see that these discount levels are, unsurprisingly, higher to what they were last year at the same time. What's interesting to note is that clothing and bags are where you see this year's discounts higher than last year, while interestingly, footwear is considerably lower this year than in April 2019.
Closing out our analysis, we took a look at whether discounting has propelled higher sold out product rates in recent weeks. We see that at last measurement (April 19), the sold out rate for discounted products was double that of non-discounted products.

Our advice to maximize the efficacy of promotions and discounting during this time is to keep people engaged - discounts that rotate categories and/or brands, offering future gift cards, and sales positioned as archive or sample sales, where appropriate.

You've got questions, and we've got answers. Just drop us a line here and we'll be in touch!

]]>Highlights:
-Luxury discounting remains high, with discounts most likely in apparel, but least likely in handbags and sneakers.
-Amount of goods on sale in active and sportswear decreased from the last week in the US.
-In active and sportswear, sneakers were most likely to be discounted and had the highest]]>https://stylesage.co/blog/covid-19-april-22/088b29a8-3fa5-4927-9967-b95e5a95b0d4Wed, 22 Apr 2020 01:11:51 GMT

Highlights:
-Luxury discounting remains high, with discounts most likely in apparel, but least likely in handbags and sneakers.
-Amount of goods on sale in active and sportswear decreased from the last week in the US.
-In active and sportswear, sneakers were most likely to be discounted and had the highest discounts.
-Discounting has continued to increase amongst US specialty retailers.
-Staying in goods, like robes and pajama pants were least likely to be discounted.

Luxury

This week we're examining not only the macro movements of the luxury sector, but what's happening at the category level. Let's take a closer look. This past week saw slight decreases in the proportion of items on sale at luxury retailers. The same trend was present in average discounts, which trended down by 1-2 percentage points across geographies (not shown).
Moving onto what was happening at the category level, we see some notable themes emerge. The first was that the categories most likely to be marked down (highest discount penetration) were pants, dresses, tops, and outerwear. Each of these had more than 50% of products marked down. What's also worth noting here is what was least likely to be discounted, and that included handbags (30%) and sneakers (36%).
Lastly, we examined how high those average discounts were, and our analysis showed a similar trend to what was (and wasn't) marked down. The same four categories (dresses, pants, outerwear, and tops) that were most likely to be marked down also had the highest average discounts. Likewise, sneakers and handbags also had the lowest discounts. These two categories are proving to be more resistant to discounts than most in the luxury sector, and it's for that reason theses two categories should be noted as bellwethers to the state of the luxury sector.

Active + Sportswear

Have you found your favorite virtual workout session yet? As we all attempt to keep ourselves active, let's also track the latest movements of the active and sportswear market.
There's been a little bit of movement in the market this week as amount of assortment on sale has gone up a few percentage points in Germany, Italy, France, and the UK. On the other hand, discount penetration for active and sportswear has gone down in the US, but it's worth noting that the US still has the highest proportion of goods on sale compared to other countries. Average discounts have remained stable from previous weeks (not shown).
As with luxury, we wanted to see what was happening at the category level. Here we spotted an interesting trend. Where in the luxury sector, sneakers were one of the categories with the lowest likelihood of discounting, in the more mainstream price points of the active and sportswear space, they were the category most likely to be discounted. Active tops, pants, and swimwear were not far behind sneakers. Base layers like sports bras were amongst the products least likely to be marked down.
We also wanted to see which categories have the highest average discounts. Unsurprisingly, the categories with the highest discounts were the same as those most likely to be marked down.

Specialty Retail

Over the past weeks we've seen the proportion of goods on sale in the US specialty sector averaging around the 50% mark, with average discounts clocking in around 20%. Let's see if this has shifted significantly from the previous week.
This past week saw both discount penetration and average discounts creep upwards, landing at 53% and 22%, respectively.
As we did with the other sectors, we also took a closer examination of category level trends. Here we saw that sweatshirts, sweaters, chino pants, tees, and jeans were most likely to be marked down. Interestingly, dress pants, along with robes and pajama pants were least likely to be marked down.
And last but not least, we saw that chinos, sweaters, sweatshirts, tees, and jeans had the highest average discounts. The lowest? Yep, it was dress pants, robes, and those trusty pajama pants.

Which categories are you closely tracking? Email us here to learn more about what's happening in your specific corner of the market!

]]>Highlights:
-Luxury discounts remain high in what's becoming the new normal.
-Active and sportswear discounting is showing a decreasing trend from one week ago.
-Amongst active and sportswear retailers, when marked down, swimwear and sandals had some of the highest sold out rates.
-Specialty discounting has increased, but it's discounting]]>https://stylesage.co/blog/covid-19-april-15/7178eb14-9b01-4cf9-9982-5cfda57984dcTue, 14 Apr 2020 22:50:06 GMT

Highlights:
-Luxury discounts remain high in what's becoming the new normal.
-Active and sportswear discounting is showing a decreasing trend from one week ago.
-Amongst active and sportswear retailers, when marked down, swimwear and sandals had some of the highest sold out rates.
-Specialty discounting has increased, but it's discounting driven in large part by clothing and not footwear.

Luxury

Last week we saw a trend of deepening discounting emerging in the luxury sector. Is discounting the new norm or was that just a test? Let's take a look.

First off, we examined how much of luxury assortments are on sale. Otherwise known as discount penetration, we saw that while down a few points, discounting levels remained high in markets including the US, Germany, and the UK.

In order to understand how high these are this year, relative to what they'd typically be this time of year, we looked at historic discount penetration for US luxury retailers. Comparing this past week to the same time in 2019 (blue), you see just how much more is on sale now (in red) than would typically be.

Last but not least, we took a look at how high discounts were. Much is unchanged from last week, where Germany, the US, and UK had the highest average discount amounts - hovering around the 20% mark.

Active + Sportswear

As we move onto the active and sportswear sector, things are looking pretty strong, relatively speaking. Let's take a closer examination of what's happened over the past week.

We saw some decreases in how much of assortments are marked down. The US market still shows the highest proportion of markdowns, at 38% for the week ending April 12.

Shifting over to average discount amounts, we saw that these also decreased slightly, between 1-2 percentage points across geographies, from last week.

We also wanted to take a look at what's selling out at the highest rate over the past seven days. We split this by what's marked down versus what's not. As you can see amongst products not marked down, underwear (like sports bras), hoodies, and bottoms were most likely to have sold out over the past week. For products marked down, more forward-looking categories like swimwear and sandals were most likely to move.

Specialty Retail

Moving onto our last sector, specialty, let's see what's happening amongst this group of retailers since we last checked in.

For specialty retailers in the US, we've seen a slight increase in both the proportion of sale merchandise, as well as the discount amounts, from one week ago. The current discount penetration is 48%, and the average discount amount is 20%. (Keep in mind this doesn't include additional promotional discounting.)

Lastly, it's worth noting that overall, how much is on sale is still greater than it was last year, however, it's an increase reflected in clothing and bags, and not in footwear.

Have questions about what this means for your business? Email us here!

]]>Highlights:
-Share of discounted goods in luxury has increased from the previous week.
-Active and sportswear discount levels remained steady from previous weeks.
-US specialty retailers have seen discounting decline slightly from previous weeks. However, discounts are still higher than they were the same time last year.
-New product introduction]]>https://stylesage.co/blog/covid-19-april-8/fbec5c47-7bea-4ad9-93a7-e8c31dafdeb3Tue, 07 Apr 2020 22:10:49 GMT

Highlights:
-Share of discounted goods in luxury has increased from the previous week.
-Active and sportswear discount levels remained steady from previous weeks.
-US specialty retailers have seen discounting decline slightly from previous weeks. However, discounts are still higher than they were the same time last year.
-New product introduction rates were down slight in March (from one year ago).

Luxury

There's been some significant movement in discounts in the luxury sector since we last checked in. Over the past week, a few key retailers, including Farfetch and Saks, increased the proportion of discounts.

Farfetch has been running a campaign called "Support Boutiques," that offers shoppers 25% off a large selection of goods. In turn, Farfetch offers its boutique partners a 25% reduction in its partner fees. (Win, win, right?)

With these increases in discounts, in several countries, including the US, Germany, and UK, discount penetration went north of the 50% mark. Can and will it stay at these levels? Much remains to be seen here.

Correspondingly, average discounts on luxury goods also increased in most geographies, bringing them to the 20% mark. What else is interesting to note (data not shown here) is that we saw an average of 3% of apparel, footwear, and bags sell out over the last seven days, not as high as one might expect with higher than average discounting. (Sold out means it's unavailable in all sizes.)

Active + Sportswear

One of the week's brighter spots included the relative strength of the activewear market.

In this case, we saw little to no change in discount penetration across geographies, indicating retailers in this space might be feeling less pain than some of their more trend-focused counterparts. The average discount penetration is currently hovering around the 40% mark.

Average discount amounts for active and sportswear also remained steady from the previous week, averaging around the 13% mark.

Oh, and curious about what we're seeing selling out in the active and sportswear sectors? Footwear (data not shown) has seen the highest sold out rates, with 11% of footwear SKUs having sold out in the last seven days.

Specialty Retail

How about another spot of good news? US specialty retailers dialed down the number of products were on sale from the previous week, landing at an average of 45% of products marked down (red). In addition, average discount amounts declined slightly a well, down from 22% to 19%.

Despite these positive indicators, historical data still shows us that markdowns are up from the same time period last year, a gap that is likely to increase as the window for selling spring merchandise starts to close.

Let's take a look at one more metric, one that we'll begin tracking as the situation evolves, which is new product introductions. This metric tells us what proportion of goods is newly released.

Our data shows that from one year ago (March 2019 versus 2020), the new product introduction rate is down two percentage points. As disruption to the supply chain occurs, and major retailers pull back on new summer and fall merchandise, we anticipate this impact might become more marked over the coming months. Check back here, and we'll keep an eye on this.

What other questions are you and your teams focused on as the coronavirus continues to impact our industry? Let us support you! Email us here to get in touch!

]]>Highlights:
-Luxury discounting is down in the US from one week ago.
-Discounting in active and sportswear continued to increase.
-US specialty retailers have slightly increased proportion of merchandise marked down from last week, but average discounts are holding steady.
-Sold-out product rates are higher in tops and sweatshirts than]]>https://stylesage.co/blog/covid-19-april-1/cb1db1ef-417f-48d7-b5d8-83a6694832d2Wed, 01 Apr 2020 01:03:31 GMT

Highlights:
-Luxury discounting is down in the US from one week ago.
-Discounting in active and sportswear continued to increase.
-US specialty retailers have slightly increased proportion of merchandise marked down from last week, but average discounts are holding steady.
-Sold-out product rates are higher in tops and sweatshirts than bottoms.

There's nothing that's been normal nor easy over the past week as we've watched retailers make major moves to shore up their cash positions and save jobs. With stores closed, factory orders cancelled, capital expenditures halted, and many retail employees now being furloughed, it's critical to see what moves retailers are taking to move inventory now.

Luxury

Starting with luxury, our last update saw significant increases in the amount of merchandise on sale at US luxury department stores and multi-brand retailers. What's notable from previous weeks is that one of the key retailers in this space, Net-a-Porter, has taken the steps to close its warehouses in both the US and Europe. While the site is shoppable, delivery is delayed until further notice. Let's check out what else has changed from last week.

We saw discount penetration in the US pull back from last week, and in other countries it remained largely stable.

As we looked to the average discount amounts, these also decreased slightly across geographies from the previous week. Luxury is not a market accustomed to sustained discounts, but with projections of luxury's losses growing larger by the week, we may see some unusual moves in the weeks and months ahead.

Active + Sportswear

Last week, we found that active and sportswear weren't immune from discounts, so the question for this week is, will those discounts go up or down?

The week past saw discount penetration increase, by an average of three percentage points in each country in the sample size.

This increase of how much was on sale also showed up in how large those discounts were. It's worth noting that there does seem to be some corresponding lift in sold out numbers, which reached a peak of 9% the week of 3/22 (but a peak that was also seen pre COVID-19 in the middle of February - data not shown.)

It's worth noting that several of the giants in this space have strong liquidity and are well-positioned to weather the storm. In addition, their product assortment tends to be more seasonless. Nevertheless, they face the same pressures as everyone else, to move merchandise that if unsold, will weigh down their bottom lines.

Specialty Retail

Moving onto specialty retail, the story in previous weeks, as it was with other sectors, was that discounts were climbing upwards with no end in sight. Let's examine if that was the case over this past week.

Well, it probably comes as no surprise that discount penetration was up (red), but the good news was that average discounts were stable from the week prior (blue.) How long they will hold at this level remains to be seen.

It turns out that the trend Walmart acknowledged also holds true for our set of specialty retailers. Sweatshirts, hoodies, and tops all had higher sold out rates than casual bottoms, including joggers and leggings (week of 3/22).

What else is interesting here is that, during the same time frame, sleepwear and pajamas had even higher rates of being sold out than the other apparel categories in our sample did. It seems likely that increased teleworking is going to become mainstream post-COVID-19, and as a result, there will likely be corresponding demand shifts in specific product categories, shifts that are only just beginning to play out.

Have questions about these data points, how your specific sector looks, or other data trends we're seeing? We've got you! Email us here to learn more!

]]>Highlights:
-Luxury department stores in the US have increased discounting over the past week.
-Amount of active and sportswear on discount also went up, but average discount increases were minor.
-While a discount is the norm, specialty retailers also dialed up how much was on sale, particularly in apparel.

Highlights:
-Luxury department stores in the US have increased discounting over the past week.
-Amount of active and sportswear on discount also went up, but average discount increases were minor.
-While a discount is the norm, specialty retailers also dialed up how much was on sale, particularly in apparel.

Things have been evolving quickly as the coronavirus continues to unleash disruption across the globe. The last week has seen fashion retail face blows that were previously inconceivable, yet it's also seen us come together to find a way forward. And for that, we're so very proud to be standing side-by-side with you during this time.

Let's take a moment to check in and see the latest data trends from the past week.

Luxury

Last week we reported that discounting was pretty much stable, coming down from peak winter sales, but this week we're seeing some shifts underway.

First, several luxury department stores in the US have started discounting more items, leading to an uptick in discount penetration of more than 10 percentage points from the previous week. The other European countries in the sample have more or less remained even from previous weeks' levels. If you weren't on sale, you were likely a handbag, where only 10% were on sale (versus 34% of apparel - data not shown.)

Next, we looked at how high the discounts were, and again, average discounts were stable in the European countries in our sample, but in the US they had increased from last week (from 12% to 16%).

The coming weeks should shed light into whether this uptick in the US is temporary, or whether it might start to spill over into other retailers and geographies.

Active + Sportswear

Last week we offered up the hypothesis that active and sportswear, due to their sustained strong performance, might be at an advantage. While we're a long ways from seeing whether that's actually the case, we can report that active and sportswear markdowns did increase over the past week.

In fact, there were consistent increases in 4-5 percentage points, across geographies, in discount penetration. Even retailers like Nike, who rarely offer sitewide discounts, had a 25% discount last weekend.

The good news was that while the number of markdowns increased, the average discount amount ticked up only slightly, by an average of two percentage points. What's more, while both discount penetration and average discounts are nearly identical to their levels at the same time last year (data not shown).

Specialty Retail

In this sector, a discount is far from the rare occurrence, so we have to wonder, "What, if any, reaction should we expect in this retail sector?"

You wouldn't be incorrect, if you'd assumed that both markdowns and their volume, have increased from when we checked in last week. Indeed, both the proportion of products marked down as well as the average discount went up by five percentage points, landing at 48% and 22%, respectively.

Where you see the biggest change in markdowns from last year is specifically in clothing. where there's been a five percentage point increase in how much is marked down, compared to the same week last year (43%-->48%). Notably, this isn't a trend you see playing out in footwear and bags.

Have questions about these data points, how your specific sector looks, or other data trends we're seeing? Email us here to learn more!

]]>As we've been inundated with coronavirus messages in our respective inboxes over the past few weeks, it's clear that retailers' customer-facing responses to coronavirus have been all over the map. As brands have checked off the 1) operational and 2) "we're with you" emails, we gingerly move into, "So what]]>https://stylesage.co/blog/corona-customer/c2677880-659b-4144-877d-17b994db6d86Mon, 23 Mar 2020 23:14:06 GMT

As we've been inundated with coronavirus messages in our respective inboxes over the past few weeks, it's clear that retailers' customer-facing responses to coronavirus have been all over the map. As brands have checked off the 1) operational and 2) "we're with you" emails, we gingerly move into, "So what do we say now?" territory.

It's new ground for us all, and there's no perfect playbook, but there are ways as a retailer, you can be your best, no only during, but after this crisis.

Figure Out Which Categories Matter

In times like these, not all categories are created equal. It's true, shoppers are stuck at home for the foreseeable future, and as a general rule they're going to be putting their "outside" clothes on ice. Despite that, at this moment opportunity still exists for other categories.

What do those opportunities look like? Take, for example, online searches for "grey sweatpants." Our Trend Radar shows a 171% increase in searches for this product from one year ago.

Another opportunity might be a pair of sneakers for that sanity-preserving (and properly social distanced) run outdoors, a fun pajama set, or a soft cardigan that can be thrown on to go outside to walk the dog. Think of items that are functional, versatile, and durable, as the stars of your assortment right now.

Being Mindful

Speaking of a nice pair of sweatpants, let's make sure our language in emails to customers is as understanding as our favorite pair of sweats is. (Worn a few days in a row, has a coffee stain...and offers up zero judgements of us.) But in all seriousness, over the past week, we've seen increasing mentions of words like "soft," "cozy," "comfortable," and for good reason. These words evoke good feelings, and aren't immediately associated with being "sales-y."

Promotions from left to right: Revolve, Free People, Lou & Grey

Is it ok to send promotional emails? Yes, but don't be tone deaf. Be paying close attention to your email open rates and social post engagements, test subject lines and images, and take the consumer "temperature" as best you can. As the COVID-19 scenario evolves, consumer confidence improves, and customers begin to make more future plans, you can evolve your message to match how your consumer is feeling.

A Time for Storytelling

In a time when customers are going to be spending more time on their phones, you have the benefit of their attention. What is it that you have to tell them? Some brands are taking advantage of this moment to talk about brand heritage, product craftmanship, and founder stories. These themes resonate particularly well in a time when folks are focused on the stuff that matters.

Promotions from left to right: Alex Mill, Office of Angela Scott

So take this moment to say something substantive about your brand to your customer. You may not get an opportunity like this again.

A Customer Now...Is Your Best Customer Tomorrow

You know who your most valuable customers are, and in a crisis customer behavior is going to be shifting significantly. The customer who buys in a crisis may look different from your usual best customer, so study their behaviors and motivations closely.

Are there any surprising demographics emerging? What are they buying? Did they buy only after a markdown or major promotion? Was it a practical or feel-good kind of purchase? Do they live near a store location? Data points on these things can help guide more effective customer acquisition (and retention!) in the future.

And let's also not forget, how are you going to thank them and build customer goodwill? Their purchases mean a lot right now, don't they? Perhaps you send a personal note or follow-up? Or maybe you include an unexpected gift with purchase? Why not consider a future discount or gift card? While the present moment might be fraught, we have to be thinking about preserving this customer relationship for the future.

We've already seen the fashion industry come together in new and unprecedented ways over the past weeks, and it's that collaboration that makes us so very proud to be a part of this industry.

]]>"Extraordinary," "unprecedented," and "once-in-a-lifetime," are all phrases we've summoned over the past weeks as business as usual becomes anything but. Due to the coronavirus pandemic, it's a difficult time for us all, so we want to first send our warmest wishes for wellness to you, your friends, and your families,]]>https://stylesage.co/blog/covid-19-tracking-its-ongoing-retail-impact/0fd68b13-71fd-4f4a-a358-077ab9cd74b4Wed, 18 Mar 2020 01:40:00 GMT

"Extraordinary," "unprecedented," and "once-in-a-lifetime," are all phrases we've summoned over the past weeks as business as usual becomes anything but. Due to the coronavirus pandemic, it's a difficult time for us all, so we want to first send our warmest wishes for wellness to you, your friends, and your families, as you navigate this new reality.

Second, as your partners, we want to remain a trusted source of data and insights for what's happening in the retail world around us. We'll be updating you weekly on what's happening in fashion retail across different geographies and categories.

With the question of how luxury should respond top-of-mind, it's important to examine the recent behavior of luxury department stores and multi-brand retailers in the US, UK, Italy, Germany and Spain, in order to gain clarity on their merchandising strategies.

The chart above shows you how much of luxury retailers' assortments are on sale. As retailers held their winter sales through January and February, as you'd expect, this proportion peaks in the first two months and then declines into March. Notably, over the past two weeks, the number of products marked down has remained stable. Let's next take a look at how high discounts were.

Average discounts have also remained stable, post winter clearance season. Keep in mind that while luxury brands need to clean house (and rid themselves of unwanted merchandise) every once in a while, they must do so with care. For a luxury brand, its prestige and image is correlated to its pricing, and therefore any discounts need to be undertaken with extreme caution.

The verdict? Despite the troubles ahead, we don't believe luxury retailers are likely to take any drastic pricing or discounting moves. Will they try to start a sale a few weeks earlier to clear excess merchandise? Entirely possible. But they're also as likely to double down on clienteling strategies that will engender future loyalty. Check back here and we'll keep you posted.

Active + Sportswear

Next up, let's take the pulse of active and sportswear brands and retailers. While it's become a more competitive space, in theory, it's also a sector positioned better than most, as it faces the coronavirus headwinds.

If you take a look at proportion of active and sportswear marked down, it illustrates the seasonal clearance pattern in January and February we mentioned previously. But what we also see is an upwards creep in discounted goods going into March. To see if this is significant, it's important to examine this side-by-side with how high those discounts are.

While each of the brands and retailers across geographies have seen their average discount go up by one percentage point since the beginning of March, it's even with where average discounts were during the same week in 2019 (not shown).

As with luxury, active and sportswear's response to market dynamics and consumer sentiment will continue to evolve. There's market share to be grabbed for those retailers and brands who unlock the opportunity to be a digital platform, community, and resource for customers who, like never before, are tuned into their health and wellness needs. Watch this space for updates and boss brand moves.

Specialty Retail

We don't want to leave you without touching base on the state of the specialty retailer. By the time of this writing, many specialty retailers, who call the mall home, have either voluntarily closed, or been required to do so for an indefinite time period due to social distancing. Undoubtedly, these retailers are feeling the blow, so let's take a look at if and how they're responding digitally.

For January and February, more than 40% of specialty retailers' merchandise was marked down (red line). That declined into the beginning of March, at which point in early March, we've seen it once again exceed the 40% discount penetration mark. From the beginning of March, discount penetration amongst this group of retailers has increased by six percentage points.

Next, if you look at the blue line, which tracks how high those discounts are, the same theme follows: after seasonal highs, discounts fell in late February, only to pick back up in early March. From the beginning of March, average discount amounts are up two percentage points. What's more, both discount penetration and average discount are up from the same time last year (not shown), highlighting potential vulnerabilities in this sector. While these are not drastic shifts, they are a benchmark from which to gauge the market's future movements.

Responding with Humanity

If we're honest, the recent events make it feel awkward to be selling stuff. If now's a time for anything, it's to be informative. But looking forward, take inspiration from these brands who have tapped into social media to virtually and authentically connect with their audiences over the past few days.

Carbon38, a premium active lifestyle retailer, is hosting free digital fitness classes streaming live from Instagram, while the founder of jewelry brand Stone & Strand, who usually goes live to show shoppers how to make "earscapes" and models their products, took a pause on Instagram live to "check up on how their followers were doing" and get feedback on what they wanted to talk about going forward. And up-and-coming beauty brand Sunnies Face showed solidarity with folks around the world who are working from home, sharing a screenshot of its team's video conference.

We know what's ahead is going to be tough, but we're here for you! How can we help you, and what information would be most useful to you and your teams? Get in touch with us here!

]]>Last week, Burlington announced that it would be exiting the e-commerce business. It might seem a strange and counterintuitive announcement, were it not for the category that Burlington operates in: off-price. While nearly every other retail vertical has moved online in some way, shape, or form, off-price hasn't made online]]>https://stylesage.co/blog/online-off-price/8dbab70b-b671-4761-9ac5-e56c280c997eWed, 11 Mar 2020 00:01:34 GMT

Last week, Burlington announced that it would be exiting the e-commerce business. It might seem a strange and counterintuitive announcement, were it not for the category that Burlington operates in: off-price. While nearly every other retail vertical has moved online in some way, shape, or form, off-price hasn't made online its focus in any significant way over the past decade.

"Why's that?" you might ask. To start, off-price has continued its upwards growth trajectory powered almost entirely by off-line sales, ringing up quarter-over-quarter, year-over-year sales growth for the key players including TJMaxx, Ross Stores, as well as Burlington. (For example, only 0.5% of Burlington's sales came from online.) The continued focus on off-line is clear from the key players in the US who continue to open up new store locations. In fiscal year 2019, TJMaxx alone added 223 stores to its store count, bringing it to a total of 4,529 stores.

So back to the question of whether online should matter to off-price. There are other pertinent reasons behind Burlington's move. Its new CEO, Michael O'Sullivan, noted the following reasoning for pulling out of online during the company’s fourth quarter earnings call, "We’re a moderate off-price retailer. Our average unit retail is about $12. E-commerce, when you fully account for the cost of merchandising, processing, shipping and accepting returns, it’s very difficult, impossible really, to make at those price points in the businesses that we compete in. He also added, “There are also very significant constraints on recreating the off-price treasure hunt in an online environment.”

All reasonable and sound points, right? On the one hand, the category's fiscal discipline and laser focus on an off-line experience is to be applauded. On the other hand, isn't this mentality just asking for an outside challenge?

If I were an off-pricer, rather than dismissing e-commerce entirely, I'd be looking at alternative commerce models, and not just those in the apparel space. For example, a "limited" customer service model, that perhaps discourages returns and exchanges, might help alleviate some costs related to e-commerce. What about segmenting what's sold online - perhaps higher ticket categories - where cost of selling can be offset and the learnings filed away for a broader e-commerce roll out? In addition, I'd be exploring ways to quickly list products, whose quantities are often limited, onto my site. And as to creating that sense of treasure hunting, I'd suggest looking at selling memberships where as a core benefit, the customer gets first access to new products. Etsy, ThredUp, and The Real Real are all, in their own ways, doing some element of the above.

But let's not leave today without talking about the department store off-pricers like Saks Off Fifth, Last Call, and Nordstrom Rack. There's a distinct difference between the TJX's of the world and the department store version. For the department stores, off-price is not only a way to reach new shoppers at a lower price point, but it's also a means to rid themselves of products that didn't sell using regular pricing and promotional strategies. (They also source product specifically made for off-price.)

Either way, many department stores are increasingly looking to off-price as a way to offset softening demand for their full-price products. In fact, our data shows that from one year ago, the average number of products available at department store off-pricers has increased by 13%. The biggest increases at the category level have included men's footwear and accessories including jewelry. Moral of the story is that while off-price shouldn't be a crutch for department stores, the off-price model can be a nice complement to their full-price businesses to the extent that it doesn't cannibalize full-price sales.

Is off-price bucking the malaise of other areas of retail? Yes. Is is immune from disruption? Well, retail has a funny way of recycling hubris, and as Jason Goldberg, Chief Commerce Strategy Officer at Publicis puts it, "Every category thinks they are unique until they are disrupted."